Risk Management: Why 2% Per Trade
Key Idea
Small, repeatable risk keeps you in the game across cycles and drawdowns.
The Psychology
Low risk per trade keeps emotions stable, reducing tilt and enabling consistent execution.
The Math
Losing 10% requires 11.1% to recover; losing 50% requires 100%. Protect the base.
Execution
- Define invalidation.
- Size position so stop = 1–2% of portfolio.
- Log outcomes.